PPG is expected to introduce some products new to Mexico and the surrounding Latin American region once it has consummated the announced plans in late June for the $2.3 billion acquisition of Comex, expected to gain approval from the Mexican anti-trust agency soon.
“The transaction will have, as a potential benefit, that PPG will introduce into Mexico state-of-the-art technology, as well as new architectural products that currently are not sold in Mexico,” said Mark Silvey, a spokesman for the company, in Pittsburg.
Technical sales and support of the combined brands will be a primary strategy in architectural, automotive and industrial sales, according to a post-acquisition announcement comment by Diane Kappas, PPG vice president for the marine coatings business in the Americas.
A clear key to Comex’ success in the region is its massive store network. The company sells in Mexico and Central America through some 3,600 stores, largely owned and operated by over 700 concessionaires. Comex has some 3,900 employees, eight manufacturing facilities and six distribution centers, and had sales of approximately $1 billion in 2013. PPG expects acquisition-related synergies of up to four percent of Comex sales – or some $40 million – will be achieved over a two-year period, along with double-digit increases in revenues, according to PPG CEO Charles Bunch, speaking in an analyst conference call in mid-July. “The majority of the synergies will arise from the purchase of materials and basic inputs from powerful international suppliers,” says Silvey. Overall, the company’s Latin America sales are projected to rise to 11 percent of global sales from a current five percent, with Comex sales added.
Architectural Segment to Expand Most
PPG officials say it has “no footprint” in the country’s architectural market, but the company expects sales to be boosted by the rapid rate of new home construction in Mexico, that are typically hitting 400,000 units per year, according to company COO Michael McGarry, also on the conference call.
PPG’s architectural presence in Latin America is primarily in the South America region. It now operates its Tintas Ideal business in Brazil in Gravataí, Rio Grande do Sul state, producing architectural, industrial and marine coatings and operates in Argentina, in Pilar, Buenos Aires province, where it manufactures architectural and industrial products.
PPG also manufactures architectural coatings in Paramaribo, Suriname, for export to the Francophile Caribbean, the EMEA, and other country markets; PPG has a presence in French Guyana, Guadalupe and Martinique, where it markets its La Seigneurie and Geuthier brands.
Automotive and Industrial Strength in the Region
Although PPG holds a majority share of the Mexican automotive market, it will not run as much risk of forming a monopoly as did Sherwin-Williams in attempting to purchase Comex, since the latter holds only about two percent of the Mexican automotive market. PPG operates an automotive and industrial coatings plant in San Juan del Rio, Queretaro state, Mexico, where it recently announced $27 million in new investments. New PPG sales in the Mexican automotive paint aftermarket are expected to grow particularly, thanks to the Comex store and technical support network. “This demonstrates PPG’s commitment to Mexico and its intention to support the economy of Mexico,” said Silvey.
In Brazil, PPG manufactures industrial and marine coatings in Sumare, in Sao Paulo state, where some $40 million in new investments are underway. In Medellin, Colombia, PPG acquired Colpisa in 2012, a licensee of PPG’s automotive, industrial and architectural coatings technology, marketed in Colombia and Ecuador.
PPG also purchased a distributorship in Panama earlier this year.